than federal regulations. As for those who argue that the Price-Anderson Act is necessary in order to protect the public, this has never been the case. As long as the federal government arbitrarily limits liability, and "holds harmless" those who are most responsible for an accident, the rights of the public are not protected. The most important thing that Congress can do to protect the public, is restore the public's most basic right--the right to sue someone who has caused them harm. Anyone who would argue that without Price-Anderson there is no assurance that the nuclear industry would have adequate liability insurance, does not understand a basic fact of the marketplace. Investors in the nuclear industry would insist that these companies purchase liability insurance, and the amount that would be purchased, either from commercial sources or self-insurance arrangements, would certainly be greater than $560 million. Conclusion The position of the National Taxpayers Union on the issue of Price-Anderson is straightforward. We believe every person, and every industry--including the nuclear industry--should be fully accountable for the consequences of their actions. If one party causes another party to suffer personal injuries or property loss, the party at fault must be fully responsible for the financial consequences. The federal government should not arbitrarily impose those costs on either the taxpayers or the victims. Repeal of the Price-Anderson Act, or at the very least- 6 elimination of the limit on nuclear accident liability--is essential if we are to know the real costs of nuclear power. The National Taxpayers Union opposes all federal subsidies for energy and other industries. Only when the entire costs of all energy sources are internalized, will the market be able to choose the most efficient means for generating power. The choice among energy sources should be based on a rational evaluation of all alternatives. The issue of the Price-Anderson Act should not be used as a forum to debate the merits of nuclear power. The fundamental issue before Congress is not "yes" or "no" to nuclear power, it is a question of whether the federal government should continue to insulate the nuclear industry from financial risk and subsidize it as an energy source to the detriment of other forms of energy. The effort to end this subsidy will be a bi-partisan one; and it will transcend the "pro vs. anti" nuclear lines. We urge Congress to carefully scrutinize the Price-Anderson Act and reject a "business-as-usual" attitude toward this important legislation. 7 ENVIRONMENTAL POLICY INSTITUTE STATEMENT OF KEIKI KEHOE OF THE ENVIRONMENTAL POLICY INSTITUTE ON BEHALF OF ENVIRONMENTAL POLICY INSTITUTE PUBLIC CITIZEN'S CRITICAL MASS ENERGY PROJECT UNION OF CONCERNED SCIENTISTS BEFORE THE SUBCOMMITTEE ON ENERGY AND THE ENVIRONMENT HOUSE COMMITTEE ON INTERIOR AND INSULAR AFFAIRS Thank you for this opportunity to present our views on the Price-Anderson Act to your Committee. The question of who should bear the risks of nuclear technology is a critically important public policy issue. As the 1987 expiration date of the PriceAnderson Act nears, we look forward to a complete public reevaluation of the present Price-Anderson Act policy. We are glad that this Committee is taking an early look at these issues, the questions raised in this hearing today will be valuable for the Congress in the many months to come. The Price-Anderson Act is a very complex law intended to balance the needs of the nuclear industry, the concerns of private insurers regarding nuclear accident liability and protection of the public in the event of an accident. The PriceAnderson Act was intended to be a temporary solution to a temporary problem. According to the 1957 Senate report, it was clearly expected that after ten years of commercial nuclear power, "...the problems of reactor safety will be to a great extent solved and the insurance people will have had experience on which to base a sound program of their own...." Unfortunately, none of these expectations have come to pass. Many of the problems of reactor safety continue to be unsolved, the private insurers continue to be reluctant to fully underwrite the risks of nuclear power, and the nuclear industry has not been weaned of the extraordinary protections provided by the PriceAnderson Act. In its present form, the Price-Anderson Act creates a series of interrelated problems. The Act provides an unprecedented subsidy to the nuclear industry, it reduces the incentive for 218 D Street, S. E., Washington, D.C. 20003 (202) 544-2600 safety within the industry, and it forces the public to accept risks that neither the nuclear industry nor the private insurers are willing to assume. This testimony will concentrate on the protection of the public under the Price-Anderson Act, legislation before this Committee, the recommendations of the NRC and the newly emerging problems of liability limits for DOE facilities. PROTECTION OF THE PUBLIC As Congress begins its reassessment of the Price-Anderson Act, it will find that the "public protection" features of the Act have been grossly overrated by the nuclear industry. The Price-Anderson Act limits the financial exposure of the nuclear industry, private insurers and the federal government following a nuclear accident. The only party subject to totally unlimited exposure is the public. The vulnerability of the public is considerable for the following reasons. 1. The $585 million compensation pool is likely to be totally inadequate. Following a serious nuclear accident, a two-tiered fund would be available to compensate public losses. The first layer of coverage comes from liability insurance purchased by utilities, currently $160 million. Once that is exhausted, utilities with nuclear plants would contribute $5 million per powerplant into a compensation fund. With 85 powerplants currently licensed, this layer of coverage would provide an additional $425 million. Combined, the total compensation pool-if needed today--would reach $585 million. When Congress first enacted the Price-Anderson Act, a $560 million limit on liability was essentially pulled out of thin air. In the words of co-author Senator Clinton Anderson, it was chosen because it "would not frighten the country or the Congress to death...." At the time, the Joint Committee on Atomic Energy knew that early studies of nuclear accident consequences estimated the potential property damages alone at $7 billion. More recent studies of nuclear accident consequences have estimated the potential damages at tens and--even hundreds-of billions of dollars. Even if $560 million is adjusted to account for 23 years of inflation, the limit would still be totally arbitrary--and inadequate following a major accident. In 1979, following the Three Mile Island accident, the Federal Insurance Administration concluded that if the accident had been more severe, off-site property losses alone could have reached $17 billion. Had the public needed to rely on the PriceAnderson compensation fund, persons suffering property losses in such an accident could expect to receive roughly 3 cents for every dollar lost. 2 2. Actual compensation to the public following a nuclear accident is likely to be much less than the $585 million fund provided by the Act. In the event of a catastrophic nuclear accident, all claims would be consolidated in a federal court, and a judge would be required to divide the Price-Anderson fund among the claimants. The judge would also be responsible for setting aside an unspecified portion of the fund to compensate persons with later claims and latent injuries. Whatever money is set aside would be at the expense of immediate claims. The amount of money actually available to compensate the public would be further reduced because all expenses for defending the insured party, investigating claims and negotiating settlements would be paid out of the fund. 3. The ENO threshold is meaningless and the "waivers of defenses" are superfluous. After a nuclear accident, the NRC would decide whether or not the event was an "extraordinary nuclear occurence" (ENO). The criteria used by the NRC for making this determination is totally arbitrary; a specific number of persons not on the site must be injured and a specific amount of off-site property damage must be reached in order for an accident to be an ENO. This arbitrary ENO distinction implies that persons suffering from a "less serious" accident should have to meet tougher conditions in order to recover than victims of a more serious accident. If an accident is not an ENO, damage claims would be subject to normal state tort laws. If it is an ENO, the defendants are required to waive their traditional legal defenses and settle claims on a "no-fault" basis. The waiving of defenses is the equivalent of being subject to strict liability. Of all the features of the Price-Anderson Act, the no-fault provisions are most often used by supporters of the Act to demonstrate the "public benefits" of Price-Anderson. The implication is that the nuclear industry has agreed to "give something up" in exchange for the limits on liability. Since most states impose strict liability on hazadous industries, the nuclear industry is not really giving much up. The defenses that are waived after an ENO would be allowed in few--if any--states under normal tort law. The most significant legal burden that the public faces after an accident is in proving the extent and cause of damages. The practical obstacles that damaged parties would face in attempting to recover for losses, particularly in the case of latent injuries, could be |